Question
A company has 5m 4% bank term loan and 10 million 1 ordinary shares currently trading at 2 per share with an expected rate of
A company has 5m 4% bank term loan and 10 million 1 ordinary shares currently trading at 2 per share with an expected rate of return of 10%. Corporation tax is 20%. Which one of the following statements is correct:- Select one:
A. WACC is 8.64%
B. The cost of equity is 8%
C. The after tax cost of debt is 4%
D. The market value of equity is 10 million
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Fundamentals of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
12th edition
978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359
